December 28, 2012 / 7:25 PM / in 5 years

UPDATE 1-Peru sol up nearly 6 pct in 2012 despite intervention

LIMA, Dec 28 (Reuters) - Peru’s sol closed at 2.552 per U.S. dollar on Friday, ending the year with gains of 5.72 percent despite record intervention by the central bank, which purchased $13.85 billion in U.S. dollars to curb the local currency’s advances to a 16-year high.

Analysts polled by Reuters at the start of the year predicted the sol would remain nearly unchanged at around 2.68, while a few predicted a gain of as much as 3 percent to 2.60.

Peru’s strong economy and the U.S. Federal Reserve’s stimulus helped stoke the sol’s advances, leaving Peru’s central bank trying to soak up excess liquidity.

The monetary authority bought dollars in the local spot market every day since Aug. 27 but only managed to slow the pace of the currency’s appreciation, not stop it.

This year, the central bank also restricted the ability of banks to make bets in the currency market and tightened reserve requirements several times to stem the inflow of speculative capital as the sol reached levels not seen since 1996.

The sol ended bidding at 2.546 per dollar on Thursday - its strongest level in more than 16 years - but finished the year slightly weaker after the central bank bought $40 million on Friday.

A Reuters analysis after the Federal Reserve announced its third round of financial easing in September said the sol would finish bidding this year at 2.55 per dollar.

Meanwhile, performance in the stock market turned out to be less robust than analysts predicted.

At the start of 2012, equity analysts surveyed by Reuters said Lima’s main stock index would finish the year with gains of between 15 percent and 30 percent.

Though the index did rise 23.5 percent through April, it then retreated on a host of worries - from the slowdown in China, to debt woes in Europe, to a sluggish U.S. economy.

As of Friday, Lima’s bourse was on track to finish the year at around 20,400 points, a rise of just 4 percent. It will be open for limited trade on Monday.

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